By Chris Matthews and Barbara Kollmeyer, MarketWatch
U.S. officials vow higher China tariffs will kick in by Friday;
Vice Chairman Liu He expected to attend negotiations this week in
Washington
Wall Street braced for further losses Tuesday as stock futures
slumped on simmering trade tensions, with U.S. officials confirming
that China tariffs would be raised by the end of the week.
How are benchmark indexes faring?
Dow Jones Industrial Average futures fell 161 points, or 0.6%,
to 26,244, while S&P 500 futures dropped 18.65 points, or 0.6%,
to 2,913.50. Nasdaq-100 futures fell 65 points, or 0.8%, to
7,738.50.
U.S. stocks finished lower on Monday
(http://www.marketwatch.com/story/us-stock-futures-sink-as-threat-of-full-blown-trade-war-re-emerges-2019-05-06),
but recouped deeper losses. The Dow Jones Industrial Average slid
66.47 points, or 0.3%, to 26,438.48 after being down almost 500
points earlier in the session. The S&P 500 index declined 0.5%
to 2,932.47, while the Nasdaq Composite Index retreated 0.5%, to
8,123.29 after touching a Monday low near the open at 7,981.85.
What's driving markets?
U.S. Trade Representative Robert Lighthizer said Monday that the
Trump administration will increase tariffs
(http://www.marketwatch.com/story/lighthizer-accuses-china-of-reneging-on-promises-says-tariffs-will-rise-friday-2019-05-06)
on $200 billion in Chinese goods early Friday. The prospect of
higher tariffs had been first raised on Sunday by President Donald
Trump, rattling investors who had anticipated that better progress
toward a near-term resolution between the two superpowers.
Read:With Trump threatening to tighten the trade screws, here's
a look at what tariffs have done so far
(http://www.marketwatch.com/story/with-trump-threatening-to-tighten-the-trade-screws-heres-a-look-at-what-tariffs-have-done-so-far-2019-05-06)
In a briefing, Treasury Secretary Steven Mnuchin, along with
Lighthizer, told reporters that the U.S. administration was made
aware over the weekend that China was trying to back away from
"some of the language" that had been hammered out in prior
talks.
U.S. officials said that tariffs on those Chinese goods will
rise from 10% to 20% at 12:01 a.m. Eastern time Friday, and markets
will likely be monitoring China for further reaction.
The Wall Street Journal reported early Tuesday
(https://www.wsj.com/articles/china-says-vice-premier-liu-he-to-visit-u-s-thursday-friday-11557211757?mod=searchresults&page=1&pos=2)that
China's Commerce Ministry said on Tuesday that Vice Premier Liu He
will visit Washington to continue trade talks on Thursday and
Friday.
Chinese investors appeared to take the latest developments in
stride, while buyers in so-called haven securities nudged the value
of assets perceived as safe slightly lower.
Despite the trade worries, markets managed a powerful rebound on
Monday, clawing back from steep declines early in the session in
apparent response to Trump's tweets about increase China import
levies.
What stocks are in focus?
Shares of Allergan Plc. (AGN) edged 0.2% lower in premarket
trade, even after the pharmaceutical company reported first-quarter
earnings
(http://www.marketwatch.com/story/allergan-stock-down-05-despite-earnings-and-revenue-beat-2019-05-07)
that surpassed Wall Street expectations.
Aramark(ARMK) stock tumbled 8.1% before the bell Tuesday, after
the facilities-management company reported first-quarter profits
and sales
(http://www.marketwatch.com/story/aramark-misses-earnings-expectations-2019-05-07)
that fell short of analyst expectations.
What are analysts saying?
"The overriding concern here is that Trump has single-handedly
halted the recent recovery in risk appetite by potentially
derailing trade talks," said Jasper Lawler, head of research at
London Capital Group, in a note to traders.
Lawler said traders were "placated" by news that Chinese
delegates would still arrive in Washington this week for talks, but
skeptical the two sides can work out the latest fracture by the
Friday deadline. "This means markets probably need to see the
Friday deadline for raising U.S. tariffs on Chinese goods pushed
back to avoid another selloff," he said.
What's on the economic calendar?
Investors will get on the number of job openings, along with the
rate at which Americans are leaving their jobs in March, at 10 a.m.
Eastern Time. At 11:30 a.m., Randal Quarles, Vice Chairman of the
Federal Reserve Board of Governors will give a speech. At 3 p.m.,
the Fed will release its estimate of consumer credit growth.
How are other markets trading?
In Asia
(http://www.marketwatch.com/story/asian-markets-mixed-as-traders-weigh-us-china-trade-dispute-2019-05-06),
the Shanghai Composite Index reversed a small lose to close up
0.6%, while the Nikkei 225 , back from an extended holiday break,
fell 1.5%. European stocks were mostly lower
(http://www.marketwatch.com/story/europe-markets-sinking-again-on-trade-war-escalation-2019-05-07),
with the FTSE 100 index down 0.6% as investors returned from a
holiday and played catch up to Monday's losses on the
continent.
Gold was down slightly, while the U.S. Dollar Index was flat,
and crude oil dropped.
(END) Dow Jones Newswires
May 07, 2019 08:26 ET (12:26 GMT)
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